California E&S Insurance

This has been discussed in other Reddit threads. Most likely outcome: 1) Total claims will far exceed Cal Fair Plan's cash and reinsurance. This will trigger mandatory assessments from all private casualty insurers in the state. This will enable Cal Fair Plan to meet claims obligations from this incident but leave it without statutory capital to write new policies or even to back future claims on existing policies. 2) Some private carriers will seek to exit the state to avoid future mandatory assessments when Cal Fair Plan inevitably goes bust again. The decreasing number of private carriers means that the likely future assessments to bail out Cal Fair Plan would be borne by fewer and fewer private insurers, giving them an accelerating incentive to exit the state. 3) Federal government does not intervene to assist CA. 4) Without effectively capitalized fire insurance available to home buyers, lenders refuse to underwrite new mortgage loans in CA, reducing the buyer base to cash only buyers and threatening catastrophe for residential home values in CA. 5) State of CA calls an emergency meeting of the Legislature and discusses a bill providing Cal Fair Plan with $20 billion of capital so it can write fire insurance policies again. Lenders backed by S&P, Fitch and Moody's indicate that is wholly insufficient capital to back the number of policies Cal Fair Plan has already underwritten, much less new policies the market wants coverage on. Non-fire casualty insurers demand protection against being required in the future to contribute assessments to Cal Fair Plan. In the end, the CA Legislature collapses like a wet taco and authorizes $100 billion of capital to Cal Fair Plan, equal to 25% of the state's budget to get it back on it's feet. All the demand of non-fire insurers are met. State spending is slashed elsewhere and income taxes are raised. A state wide sales tax increase of 1% is imposed with all proceeds used to further increase Cal Fair Plan's capital base on an ongoing annual basis.

{
  "score": 0,
  "title": "",
  "subreddit": "Insurance",
  "num_comments": 0,
  "scrape_method": "apify_targeted"
}